MDS Pharma Services, a leading provider of innovative drug discovery and development solutions, announced today two major capital programs in addition to changes to the structure of its Canadian bioanalytical laboratories.

"These actions will positively impact our customer service and support," said MDS Pharma Services President Gilbert Godin. "They will also enhance our profitability and long-term growth prospects by strengthening our ability to serve life sciences clients through improved efficiency, quality and compliance."

Capacity Expansions

MDS Pharma Services will undertake significant capacity increases in two of its highest growth market segments involving an aggregate capital commitment of Cdn$16 million over the next 12 months.

A 40,000 square-foot expansion at the Drug Safety Assessment facility in Lyon, France will result in a 30% increase in capacity at this site and facilitate the continued participation in the double-digit growth that has characterized this attractive market segment. This project is expected to be completed in second quarter of 2006.

The company will also undertake an expansion at its New Orleans clinical pharmacology unit, which will add 52 Phase I patient beds to the current 80 at this site by early 2006. The expansion has been designed to allow the site to simultaneously accommodate both smaller, specialized studies as well as larger regular studies.

"These expansions will allow us to accommodate more studies and offer greater scheduling flexibility, which benefits our biotechnology, pharmaceutical and generic clients. They also will help us continue to grow faster than the overall Phase I market, as we have done for the last three years, and to remain the leading global provider of Phase I services," said Jerry Merritt, senior vice president and general manager, Early Clinical Research.

Canadian Bioanalytical Realignment

The company will also realign the operating structure of its Canadian Bioanalytical laboratories to better align its processes with customer needs.

"This realignment will result in greater efficiencies, including more predictable work flow and the flexibility to integrate new projects," said Michael Butler, MDS Pharma Services group vice president - Early Clinical Research and Bioanalysis. "We believe this new organization will provide high quality bioanalytical information while offering the scaleability to respond to increased customer demand as the business grows."

Approximately 80 positions will be eliminated following implementation of these changes.

The new operational structure will consist of three main groups:

- Operational Quality, formed to ensure the capture and application of learnings from the retrospective review of bioanalytical studies being conducted at the Montreal facility according to a plan agreed to by the U.S. Food and Drug Administration earlier this year,

- Ligand Binding (Large Molecule Analytics), organized around large- and small-sample size projects for improved efficiency; and

- Mass Spectrometry, realigned around bioequivalence, preclinical and clinical client projects.

About MDS Pharma Services

MDS Pharma Services offers a full spectrum of resources to meet the drug discovery and development needs of the pharmaceutical and biotechnology industries. With facilities located around the world, the company applies advanced scientific and technological expertise to each stage of the drug discovery and development process - early stage: lead optimization, pre-IND research, pharmaceutical and biopharmaceutical development, early clinical research (bioequivalence, phases I-IIa) and bioanalysis; and late stage: global clinical development (phases IIb-IV) and central lab. For more information, visit MDS Pharma Services' Web site at www.mdsps.com.

MDS Pharma Services is part of MDS Inc. (TSX:MDS)(NYSE:MDZ). MDS Inc. has more than 9,000 highly skilled people in 25 countries providing a diverse range of superior products and services to increase our customers' speed, precision and productivity in the drug development and disease diagnosis processes. We are a global health and life sciences company, recognized for our reliability and collaborative relationships. Please refer to our website at www.mdsintl.com to find out more about how we help create better outcomes in the treatment of disease.

MDS Pharma Services (TSX:MDS) (NYSE:MDZ)